Heliospectra: Transitory quarter with secured growth capital
Research Update
2023-05-03
10:56
Redeye provides an update following Heliospectra’s Q1’23 report, where an increased gross margin, a well-controlled cost basis, and management’s anticipation of robust order intake in Q2’23 support an optimistic outlook. Sales and order intake came in slightly lower than expected. Hence, we have made a few minor changes to our near-term estimates. Our fair value range, however, remains unchanged, with a base case of SEK1.9 per share.
Jessica Grunewald
Henrik Alveskog
Softer sales than expected
Net sales for Q1’23 were SEK7.0m, representing a 26% y/y increase. However, these figures fell short of our expectations. We estimated that the ENKO order from Q4’22, worth SEK8.2m, would be fully recognized in Q1’23. Yet, only 28% of the order’s value was realized during this period. Consequently, sales were lower than we had forecasted. Nonetheless, we anticipate the remaining revenue recognition from the ENKO order will occur in Q2’23. Further, we do not place much emphasis on Q1 sales performance due to seasonality effects. We are primarily focused on the order intake presented in the upcoming Q2 report, which will ultimately indicate the market’s response to the new product offering.
Secured growth capital
Heliospectra carried out a rights issue and secured cSEK22m in April ’23. We are favourable to the outcome of the rights issue and conclude that Heliospectra now has ensured growth capital with solid support from its main owners. Further, management can focus strictly on executing the strategy and building awareness around the new products and value proposition.
Minor estimate adjustments - Intact fair value range
We have made minor changes to our estimates, not resulting in any changes in our fair value range. Our Base case is SEK1.9 per share (Bull: SEK5: Bear: SEK0.5).
Key financials
| SEKm | 2022 | 2023e | 2024e | 2025e |
| Total Revenue | 25.7 | 50.5 | 99.5 | 149.3 |
| Revenue Growth | -26.9% | 96.4% | 97.1% | 50.0% |
| EBITDA | -32.0 | -19.6 | -5.0 | 13.0 |
| EBIT | -36.0 | -23.4 | -8.9 | 8.5 |
| EBIT Margin | -140% | -46.4% | -9.0% | 5.7% |
| Net Income | -36.1 | -23.4 | -8.9 | 8.5 |
| EV/Revenue | 4.5 | 2.5 | 1.4 | 0.9 |
| EV/EBIT | -3.2 | -5.4 | -15.7 | 16.6 |
Q1 2023 Review
We have earlier stated that 2022 was a transitional year for Heliospectra. Last year was dedicated to product development, cost-savings initiatives, and restructuring to become more robust in 2023 with best-in-class product offerings for Smart Farming. It is intended for this year to mark a turning point. We see some early indications in the Q1 report with well-managed cost control and improved gross margin. Combined with the recent news, expanding the product portfolio with the new MITRA flex, the growth capital injection in April’23 of cSEK22m and the ambition to reach break-even by the end of 2023 boost our confidence in the transition. Yet, order intake in the Q2 report will ultimately judge the market’s reception of the new product offering.
Disclosures and disclaimers